Pittsburghers know that the times are out of joint. Somehow they're expecting the prosperity to blow up in their faces.
Fortune Magazine, 1941

Sunday, August 25, 2013

Long past inflection

Folks really take issue with this when I point it out. Some just don't believe it, others don't want to. One view of the trend in mining jobs in Pennsylvania once you separate out what is happening in the Pittsburgh MSA.

At the very least, not a sporadic trend for employment either on the upswing, or the downside.To be clear, none of this suggests the actual supply of natural gas across Pennsylvania is decreasing. Quite the opposite. Just remember that for the bulk of Pennsylvania the employment impact comes mostly during the fracking phase. Once a well is developed, the jobs move on even though the gas keeps flowing. So it is quite consistent to note the recent news that natural gas production in the state is way up, but the employment across the state is dropping consistently over the last couple of years.

In the end, economics rears its inevitable head. A lot of past Marcellus prognostication assumed some extreme form of ceteris paribus, that somehow price was going to remain stable in the face of vastly increasing supply. Yet all things are never held equal. The vast new supply of natural gas has put a big damper on the price of natural gas. Another recent report says the price pressure is far from over: Gas Prices cower before Marcellus 'Monster.' Even the biggest booster of them all, Chesapeake Energy, is now saying it needs to (slide 9)
"work off excessive excess well inventories." Slide 12 is a bit more
telling where it shows only 12% of the firms capital expenditures are in
the Marcellus region at all. Remember, jobs are mostly going to come
from spending. As a result Bloomberg is pointing out the obvious that there is now Less appetite for shale lands. Local news is that Pennsylvania's share of Marcellus Shale jobs dips. I believe that is mostly the math that results from the expansion of shale development in Ohio and beyond and not necessarily a bad sign for Pennsylvania in itself. Yet in Ohio the data is saying something a bit different than some think. From just the other day - Cleveland.com:Ohio shale gas still not creating promised jobs. What I want to know is why there is not a comparable Considine authored report for Ohio? Why was it only for Pennsylvania? Of course, there are now no longer any further reports on Pennsylvania either. In a bit of revisionism, the 2011 report is now labeled the "final in a series." Personally I think an impact report is needed now far more than in 2011. Don't infer he is not busy. Of late he is more interested in California is all.

Isn't that ex-PGHMSA story in part about the wet-dry/Utica issues combined with low natural gas prices? Meaning when natural gas prices crashed the economical drilling became where there was a good portion of NGLs and/or an overlapping Utica play, and in PA those conditions are concentrated over here in Western PA.

Which is not to dispute there has been an awful lot of BS surrounding jobs claims.